CAPITAL INCOME BUILDER
FIRST-QUARTER REPORT
for the three months ended
January 31, 1997
[Capital Income Builder logo]
[The American Funds Group(r)]
Capital Income Builder(r) seeks to provide a growing dividend - with higher
income distributions every quarter as far as possible - together with a current
yield which exceeds that paid by U.S. stocks generally.
FELLOW INVESTORS:
We are pleased to inform you that Capital Income Builder's March divid end
will result in a 1.8% increase in income for most shareholders, continuing the
fund's record of increasing distributions in every quarter of its lifetime. The
per-share dividend remains unchanged from the December distribution of 46.5
cents. However, shareholders who received the December dividend also received a
capital gain distribution of 73 cents per share, which was about 1.8% of the
net asset value at the time. For the vast majority of shareholders, who
reinvest their distributions, that distribution increased their number of
shares by 1.8% and their total March income payment by the same amount.
The 1.8% March increase in income is actually greater than most previous
quarterly dividend increases. Based on Board action today, the June dividend
will increase by 0.5 cents to 47 cents per share, which, as you can see in the
chart below, has been the pattern of regular dividend increases over most of
the fund's lifetime. This June increase in income would be 1.1%.
Capital Income Builder remains committed to its stated objectives of
providing current income above that paid by stocks generally and providing
growing income that will outpace inflation over the long term.
At the present time, CIB's current dividend rate is roughly 4.5% of net
asset value - considerably above the 1.9% dividend rate of the overall stock
market, as measured by Standard & Poor's 500 Composite Index. Moreover, the
March 1997 dividend is 5.4% greater than the one paid in March 1996, assuming
capital gains were reinvested.
[signature]
Jon B. Lovelace
Chairman of the Board
March 5, 1997
[chart]
CIB'S QUARTERLY DIVIDENDS COMPARED WITH INFLATION
(cents per share)
(Index: December 1987 = 100)
<TABLE>
<CAPTION>
Additional income earned
on initial shares if the Inflation=
capital gain distributions Consumer Price
paid in December 1991, 1992, Index (through
Dividend 1993, 1994, 1995 and 1996 December 1996)
Fiscal Quarters (right axis) were reinvested (left axis) (right axis)
<S> <C> <C> <C>
4 Aug-Oct 1987 22* - -
1 Nov-Jan 1988 28 - 100
2 Feb-Apr 1988 28.5 - 101
3 May-Jul 1988 29 - 102.3
4 Aug-Oct 1988 29.5 - 103.8
1 Nov-Jan 1989 30 - 104.4
2 Feb-Apr 1989 30.5 - 106
3 May-Jul 1989 31 - 107.5
4 Aug-Oct 1989 31.5 - 108.3
1 Nov-Jan 1990 32.5 - 109.3
2 Feb-Apr 1990 33 - 111.5
3 May-Jul 1990 33.5 - 112.6
4 Aug-Oct 1990 34 - 115
1 Nov-Jan 1991 34.5 - 115.9
2 Feb-Apr 1991 35 - 117
3 May-Jul 1991 35.5 - 117.9
4 Aug-Oct 1991 36 - 118.9
1 Nov-Jan 1992 36.5 - 119.5
2 Feb-Apr 1992 37 .3 120.7
3 May-Jul 1992 37.5 .3 121.5
4 Aug-Oct 1992 38 .3 122.4
1 Nov-Jan 1993 38.5 .3 123
2 Feb-Apr 1993 39 .5 124.4
3 May-Jul 1993 39.5 .5 125.1
4 Aug-Oct 1993 40 .5 125.7
1 Nov-Jan 1994 40.5 .5 126.3
2 Feb-Apr 1994 41 .6 127.6
3 May-Jul 1994 41.5 .6 128.2
4 Aug-Oct 1994 42 .6 129.5
1 Nov-Jan 1995 42.5 .6 129.7
2 Feb-Apr 1995 43 .8 131.2
3 May-Jul 1995 43.5 .8 132.1
4 Aug-Oct 1995 44 .8 132.8
1 Nov-Jan 1996 44.5 .8 133
2 Feb-Apr 1996 45 1.4 134.9
3 May-Jul 1996 45.5 1.5 135.8
4 Aug-Oct 1996 46 1.5 136.7
1 Nov-Jan 1997 46.5 1.5 137.4
2 Feb-Apr 1997 46.5 2.4
</TABLE>
* After less than a full quarter of operations
[end chart]
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the fund's average annual compound returns with
all distributions reinvested as of December 31, 1996, assuming payment of the
5.75% maximum sales charge at the beginning of the stated periods: Since
inception on July 30, 1987: +11.94% a year; 5 years: +11.44% a year; 12 months:
+10.88%. The fund's 30-day SEC yield as of January 31, 1997 was 4.02%. THE
FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL VARY,
SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME PERIOD OF
YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S. GOVERNMENT,
ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY
OTHER AGENCY, ENTITY OR PERSON.
This report is for the information of shareholders of Capital Income Builder,
but it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund.
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER OR CALL AMERICAN FUNDS SERVICE COMPANY,
TOLL-FREE, AT 800/421-0180.
Litho in USA TAG/ALI/3380
(c)1997 American Funds Distributors, Inc.
Lit. No. CIB-012-0397
